Berkeley puts rent-control update measure on November ballot

Members of the public line up to comment on a Berkeley rent-control ballot measure. Photo: Emilie Raguso

Berkeley is asking voters to approve updates to the city’s rent-control ordinance in November, to go into effect only if the California law restricting rent control is repealed.

State Proposition 10, also on the ballot in November, would repeal Costa Hawkins, which introduced rent-control restrictions statewide in 1995. If Proposition 10 passes, Berkeley will automatically return to its original 1980 rent-control ordinance, unless the new local measure amending it is also passed.

The Berkeley ballot measure, approved by the City Council with a 5-4 vote around 12:30 a.m. Wednesday, had gone through multiple iterations at Rent Board and council meetings. The final version approved Wednesday was a victory for homeowners and those concerned the original proposal could stifle new construction, and a blow to those calling for more comprehensive rent control.

If approved by voters, the measure will return Berkeley to its system of rent control, but exempt newly constructed buildings for 20 years, and exempt both in-law units and the main houses they’re attached to permanently.

“It’s definitely the most moderate motion we could have passed,” said Councilwoman Lori Droste, who made the motion that was approved, after the meeting. Councilwomen Sophie Hahn, Linda Maio and Susan Wengraf supported the motion, and Mayor Jesse Arreguín made the tie-breaking vote in favor of it.

Droste’s substitute motion overrode an initial proposal by Councilwoman Kate Harrison to usher new construction into rent control after 15 years instead of 20. Droste said deals had been made to line up enough votes for that 15-year timeline, but “I saw an opportunity to jump in” and call a vote on extending it.

The ballot measure does include one provision everyone agreed on from the outset.

Costa Hawkins mandated vacancy decontrol, meaning owners of rent-controlled properties can raise rents to market-rate when a tenant leaves. If the law is repealed, Berkeley will revert to its original “vacancy control” system, allowing only small annual increases, even when there’s tenant turnover. The new measure, however, would keep prior vacancy-decontrol increases intact, starting rent control from whatever a unit’s existing rent is after the election.

For example, say a tenant left a $900 rent-controlled unit in 2016. Under vacancy de-control, the landlord could set the next tenant’s rent at $1,200. If Costa Hawkins is repealed, and the Berkeley measure is passed, the $1,200 rent — not the $900 pre-increase price — will become the base rent. The landlord will be permitted to make small, annual increases on the $1,200 from there on out.

If the Berkeley measure goes into effect, new construction will be exempt from rent control for 20 years. Photo: Natalie Orenstein

What qualifies as “new” construction?

More controversial was the piece of the measure defining how soon newly constructed buildings will become subject to rent control.

Berkeley’s 1980 ordinance exempted all new construction from rent control. In 1995, Costa Hawkins prevented Berkeley from ever changing those rules, so no building constructed in the past 38 years has been rent-controlled in the city.

Many officials and community members are interested in phasing new properties into rent control on a rolling basis, but council members clashed on how long, exactly, to keep those buildings market-rate. Some said nobody has figured out the “sweet spot” that brings construction under rent control as soon as possible without dissuading developers from building in Berkeley.

Droste, who made the motion to approve the 20-year timeline, said she had sought advice from the policy director at the UC Berkeley Terner Center for Housing Innovation, who said investors and finance professionals told him anything less than 30 or 40 years at market-rate could halt construction.

“It’s really hard to have an idea of what’s appropriate. I don’t pretend to know,” said Droste, who said 12-15 years, which the Rent Board had proposed, would nevertheless buck the advice she and others had received from experts.

Harrison said conversations she had with developers and investors in connection with the 2016 Measure U1 campaign had convinced her 12-15 years would be sufficient.

While some of the concerns might be warranted in some cases, “we have to balance that against the need for tenants to have some security,” Harrison said. The timeline applies retroactively as well, so buildings constructed several years ago, which have experienced major, unpredicted rent spikes, will continue to avoid rent-control unjustly, she said.

Granny flats get an exemption

The piece of the measure that prompted perhaps the most debate and public comments Wednesday deals with accessory dwelling units (ADUs) — backyard cottages and other in-law units.

An accessory dwelling unit on Virginia Street. Photo: Frameworks

While the measure proposed by the Rent Board exempted all ADUs from rent control, some homeowners implored the council to exempt the main house on the property as well. (Costa Hawkins actually prohibited cities from including any single-family homes in rent control, but if it’s repealed, Berkeley will return to an ordinance that treats those properties like any other, subject to rent control.)

The speakers Wednesday said homeowners who need to move into the ADU on their property for financial reasons should have the ability to make decent money renting their houses. Some were also concerned the proposed measure would prevent such homeowners from moving back into the main house later on, evicting the tenants there, but Rent Board staff said they would still have the power to do that.

One young mother said she planned to build an ADU — something the City Council has encouraged — but only if she is guaranteed the flexibility to rent that property or her house out at market rate.

The final measure includes language from Hahn exempting both units on the property from rent control.

Hahn said only a small number of such properties would even be subject to rent control in the first place since the vast majority in Berkeley are considered “golden duplexes,” which are always exempt from rent control. But she supported exempting that small minority of properties, to help those homeowners “stay in our community” — the same reason she supports rent control generally, she said.

“Who are those people who might choose to live in an ADU and rent the main house for the purpose of staying in the community where they’re connected?” she said. Often they’re senior citizens who want to “age in place” affordably or people with sudden loss of income or expensive health issues, Hahn said. She said it is only “fair” to grant those homeowners the same privileges most others with ADUs receive already.

Harrison raised concerns about the future of those properties, after the original owner dies, selling or passing on the house and ADU to someone else who doesn’t need the same rent-control exemption. Future tenants should not have to pay market rate in perpetuity, she said.

“If it wasn’t for rent control, I wouldn’t be mayor”

At one point Wednesday, Wengraf questioned the general premise of rent control.

“I’m a firm believer in supply and demand,” she said. “Rent control is not means-tested. You can have a very wealthy person living in a rent-controlled unit, who will not give it up.”

“If it wasn’t for rent control, I wouldn’t be mayor of Berkeley,” he said. “I can’t afford the cost of housing in this city on my salary. Thankfully I live in a rent-controlled unit. That’s provided a great deal of stability for me and my co-tenants. Voters of Berkeley have said time and time again they support a system of rent control.”

They will have one more chance to do so — or not — in November. If the rest of the state follows suit and repeals Costa Hawkins, the new Berkeley measure will go into effect — as long as voters approve that one as well.

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